Premium on Bonds Payable has a debit balance is a contra acc

Premium on Bonds Payable has a debit balance. is a contra account. is considered to be a reduction in the cost of borrowing. is deducted from bonds payable on the balance sheet.

Solution

C. is considered to be a reduction in the cost of borrowing.

Premium on bonds payable occurs when bonds payable are issued for an amount greater than their face or maturity amount.